19 December 2018

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UK CPI: Wednesday, 9:30. Inflation stabilized in recent months, standing at 2.4% y/y in October. The Bank of England would like to raise rates in order to curb inflation, especially as wages are on the rise as well. However, the increased uncertainty about Brexit holds them back. And now, inflation is projected to tick down to 2.3%. Core CPI is also expected to dropÑ from 1.9% to 1.8%.

Fed decision: Wednesday, 19:00, press conference at 19:30. The Federal Reserve has the last word of the year and it is a critical one. There is no doubt that Chair Jerome Powell and his companions at the FOMC will raise rates. The economy continues enjoying robust growth, employment and wages are rising. In addition, the Fed indicated they are on course to increase interest rates. However, there are signs of a slowdown, mostly felt in the housing sector and in investment. Several Fed officials expressed concern about domestic and global growth. Markets have downgraded expectations for 2019 and have doubts if we will see any rate increase. The Fed’s most recent dot-plot points to three rate hikes. The fresh dot-plot will likely see a downgrade of rate hikes, but two increases are more likely than three, at least in the Fed’s forecasts. A downgrade to one would send the greenback plunging while maintaining three would be perceived as a hawkish sign. Apart from the dots, any changes in the statement will be eyed. In November’s FOMC statement, the Fed downgraded the wording on investment. Will they express worries about additional areas of the economy? Last but not least, Powell will hold a press conference after the event and may provide clarifications. He tends to provide straightforward answers about the economy and about monetary policy, but not about politically sensitive topics such as trade. The impact of the Fed decision will likely reverberate through markets through the week.

New Zealand GDP: Wednesday, 21:45. The small South Pacific nation publishes GDP data only once per quarter. Back in Q2, the economy leaped by 1%, a robust quarterly rate. We will now receive the data for Q3 and a more moderate growth rate is likelyÑ 0.6% is on the cards.

USDFed decision

GBPUK CPI

NZDNew Zealand GDP

EURUSD

Update: The pair is very close to the downtrend line.As could be seen on the daily chart that the pair is about to reach the downtrend line shown on the chart in blue. In case the pair reached this level and shows up some bearish evidence, we can go short targeting the level of 1.13 followed by 1.1220 during the week. This will be conditioned by the continuation of trading below the down trendline.

Resistance levels:

Support levels:

Recommended:

▪ 1.21▪ 1.1850▪ 1.18

▪ -▪ 1.1217▪ 1.10

We are bearish as long as the pair is traded above the downtrend line.

GBPUSD

Update: Waiting for a bearish signal to show up below the level of 1.28.The daily timeframe shows that the pair is traded below a strong resistance level so we can go short targeting the level of 1.26 as long as the pair is traded below the level of 1.28.

Resistance levels:

Support levels:

Recommended:

▪ 1.36▪ 1.3350▪ 1.29

▪ 1.2550▪ 1.2370▪ 1.23

We are bearish as long as the pair is traded below the level of 1.28.

GOLD

Update: Still traded above the level of 1250.The pair successfully managed to break through a strong resistance level that is 1250. The breakout should be confirmed by at least a daily close. So we are waiting for the pair to confirm the breakout then we can go long targeting the level of 1260 during the week

Resistance levels:

Support levels:

Recommended:

▪ 1330▪ 1245▪ 1250

▪▪ 1180▪ 1170

Waiting for the pair to confirm the breakout.

AUDUSD

Update: Still waiting for the pair to reach the level of 0.7030.As could be seen on the daily chart that the pair is about to reach a support area around 0.7030 so we believe if the pair goes down to reach this area and shows up some bullish evidence, we can go long targeting the level of 0.7350.

Resistance levels:

Support levels:

Recommended:

▪ 0.7550▪ 0.7600▪ 0.7260

▪ 0.7000▪ -▪ -

Waiting for the pair to reach the level of 0.7030.

GBPJPY

Update: The pair is on its way to our target.The pair successfully retested the broken up trendline and formed a bearish candlestick pattern below it (bearish engulfing pattern). This simply means that we can go short targeting the level of 140.20 during the week.. This will be conditioned by the continuation of trading below the broken up-trendline.

Resistance levels:

Support levels:

Recommended:

▪ 156▪ 155▪ 149

▪140.50▪ 140▪ 139

We are bearish as long as the pair is traded below the broken uptrend line.

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